The California
attorney general can force a nonprofit advocacy group to disclose its major
donors as a condition of its remaining a registered charitable trust, the Ninth
U.S. Circuit Court of Appeals ruled Friday.

The panel
affirmed U.S. District Judge Morrison B. England Jr.’s denial of a preliminary
injunction that would bar Attorney General Kamala Harris from requiring the
Center for Competitive Politics to disclose the names and contributions of its
“significant donors” on Internal Revenue Form 990 Schedule B, which it must
file with the state in order to maintain its registered status with the state’s
Registry of Charitable Trusts.

Without that
status, the center could not solicit funds from California residents. The
center has been registered since 2008, but its filings have always included
redacted versions of IRS Form 990 Schedule B.

State Statute

The attorney
general insists that the filing of unredacted versions of the form is required
by regulations enacted by the state under the Supervision of Trustees and
Fundraisers for Charitable Purposes Act.

Those
regulations, she argued, serve a compelling governmental interest because
without being able to identify donors, the state cannot determine whether
organizations are engaging in suspicious behavior, such as inflating the value
of “in kind” donations. Without unredacted Form 990s, she said, her office
would have to engage in costly and burdensome audits.

In seeking the
injunction in U.S. District Court for the Eastern District of California, the
center—which is based in Virginia and says its “mission is to promote and
defend the First Amendment rights of free political speech, assembly,
association, and petition through research, education, and strategic
litigation”—contended that the disclosure requirement violates the First
Amendment by infringing upon its supporters’ rights of free association.

England,
however, ruled that that the center was unlikely to prevail on the merits and
denied relief.

Paez Opinion

Judge Richard
Paez, writing for the Ninth Circuit, agreed.

Paez rejected the
“creative” argument that the disclosure requirement itself, and not its
potential chilling effect on donors, constitutes injury for First Amendment
purposes. That potential effect, however, does require that the regulation be
subjected to “exacting” scrutiny, he acknowledged.

But the
plaintiff, Paez wrote, “does not claim and produces no evidence to suggest that
their significant donors would experience threats, harassment, or other
potentially chilling conduct as a result of the Attorney General’s disclosure
requirement.”

He rejected the
plaintiff’s argument that a series of civil rights cases involving the NAACP
supported the center’s position. Those rulings by the Supreme Court, handed
down between 1958 and 1963, all involved strong showings that disclosure of
members’ names would subject those members to threats and harassment, Paez
said.

He also
emphasized that there would be no public disclosure, because the attorney
general’s office uses the Schedule B filings for internal purposes only.

No Preemption

Paez went on to
reject the center’s claim that the filing requirement is preempted by 26 U.S.C.
§6104, which generally permits the government to make return information for
tax-exempt groups available to state enforcers of charitable trust law, but excepts
501 (c)(3) groups such as the center.

Nothing in the
statutory language prohibits states from requiring 501 (c)(3) organizations to
supply return information to state officials directly, nor did the plaintiffs
carry their burden of showing that it was the “manifest intent” of Congress to
preempt states from enforcing their own laws with respect to such
organizations.

Senior Judge A.
Wallace Tashima and visiting Senior Judge Gordon J. Quist of the U.S. District
Court for the Western District of Michigan concurred in the opinion.